This entry was posted on 9/6/2006 4:30 PM.
“Gentrificawhat?” was about how the stage is set for gentrification. In Gentrifica2 I write about its catalyst: the home buyer.
After a vibrant neighborhood with steady or rising property values starts to decline economically, many property owners do not maintain their rental properties and abandon them after “using up” their rental values. This pattern will continue and the neighborhood may stay in this economically depressed state for any length of time.
At some point while property values are low in this particular neighborhood, surrounding areas continue or begin experiencing an increase in their property values. When surrounding property values are significantly higher than those in the neighborhood that many property owners have neglected, then the older, abandoned homes start to look like they have potential to people living outside the area.
Pretend you are buying your first home and after determining how much you can afford, you begin looking for a house that is $200,000 or less. There is an area of town close to your work with great shops and restaurants nearby that you really like. However, the least-desirable, smallest homes in that area begin at $400,000. When driving around this neighborhood longingly one day you realize that there are some cute houses that need work three streets away, and they are all priced around $175,000. You find one that is only $150,000 and know that with a few weekends of work and some regular maintenance, you could have it looking good. And if you brought in a few people to help you, then you could have one as nice as those in the area you originally fell in love with. This is such a good deal you don’t care about the abandoned properties on either side of you or the houses divided up into multiple rental units by an absent landlord across the street. You purchase the home almost immediately, and this is exactly when gentrification begins.
The actual numbers do not matter in this example. What matters is how the numbers are proportionally related to each other. One neighborhood could start going through gentrification with houses being purchased around $40,000 while another begins the process with houses that cost around $400,000. If the surrounding area has prices that are relatively higher than the neighborhood with depressed prices, then people will start looking for “deals” or “bargains” in the more depressed area. When people feel like prices in a neighborhood many property owners have abandoned or not maintained are what they can afford and the homes could be easily improved to be similar to whatever they consider to be “nicer” nearby, then gentrification begins in the neighborhood they can afford.